When working on JPEG files, should I start by converting the images to 16 bit depth? Supposedly that would make for more room for the adjustments I'm going to make on the photos. Two occasions that recently popped up while I was reading around PhotoSE questions mention this conversion:

Back in the day people would worry about doing most work in the maximum bit-depth and then converting down for output. There's nothing wrong with that principle, but in practice you should be able to do everything you need in the raw converter, so it's a moot point.

However, there are significant advantages in the further processing. After opening a file in photoshop or whatever, the next step should be the conversion into a 16-bit format. Any interim result should be saved in a non-destructive 16-bit format too. If the final result is to be handed over or uploaded in any 8-bit (sometimes jpeg is even required) format, then it should be the last and very final step converting the file back to 8 bit.

Is it really a must? Do I notice the difference if I don't do the work in 16 bit?

Honestly, without knowing what processing you do, this question cannot be answered. Now, if you do not know, go for 16-bits. In the best case you'll have better results, in the worst case, you'll have the same.
– ItaiApr 16 '13 at 13:46

I don't know, it was those two answers to other questions that brought me a memory from years ago when I did this conversion up and back down with the job done in between. I had completely forgotten about it, and the reasons too, but now I'm asking what good would it do, really. My editing is always quite light, most common things to do are lightness, contrast, hues (when WB went wrong), sharpness and crop (which has nothing to do with bit depth). Anyway, an answer could also be about what kind of processing would benefit from larger bit depth and what processes would not.
– Esa PaulastoApr 16 '13 at 15:04

2 Answers
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It depends on both the image and how much editing you are planning to do. Let's say you're only going to adjust levels. Then

8-bit JPEG -> 16 bit PSD -> levels adjustment -> 8-bit JPEG

Will give identical results to:

8-bit JPEG -> levels adjustment

This is because an 8-bit image converted to 16-bit is identical to the 8 bit version (the lower order bits will all be zero) and there's no difference between doing the levels on a 8 bit image (which will be computed internally at a higher precision and then rounded) and doing the levels command on a 16 bit image and then converting to lower precision.

However, if you do several steps, then keeping a high precision intermediate version of the image will give you better results. If you keep rounding to 8-bit after every single operation, you're very quickly going to lose tonal range and end up with a heavily posterized image.

Now I said it depends on the image content, a very contrasty image with posterization will generally go unnoticed, whereas a low contrast image with subtle graduations in the sky or in skintones will be heavily degraded by posterization.

I'd be suspect of how much you could gain by going from 8 bit to 16 bit only to go back to 8 bit again. All you could possibly do is to adjust an 8 bit image to try to expand the dynamic range, but since you are going to convert it back to 8 bit again at the end of the process, that information would just be lost again.

If you could start with 16 bit, then there is certainly a huge advantage to manually adjusting the image to make it fit 8 bit better, but if the file is already 8 bit, then the damage is done and information is lost. There could be some minor gains if you are using something destructive since you'd have to be careful about your order of operations to not peak portions of the image you work with later, but careful order of operations could avoid that. You also have some gains in rounding error reduction if you are doing heavy processing as Stan Rodgers pointed out in the comments, but I'm not sure how significant of an overall impact it will have.

The biggest thing is going to be to use lossless formats while editing so that you avoid further generations of compression. If you have the space, software and processing power to work with 16 bit, it isn't going to hurt you, but you might not have super huge gains compared to what lossless formats and/or native 16 bit shooting would get you.

Suppose he converts to grayscale and then he edits the curves to colorize only some shades of grey... Wouldn't it be better with 16 bits?
– comocomocomocomoApr 16 '13 at 14:36

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At the very least, it makes the difference between posterization and dithering as quantization error artifacts in the final 8-bit image, particularly where adjustments/tool use overlap. True, you don't have any more data to work with from the original or in the final image, but you're not committing to rounded/truncated results until all of the calculations are done.
– user2719Apr 16 '13 at 15:44

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@EsaPaulasto - if nobody else does, I will. I want people who don't have 20K+ reputations to feel like maybe they can participate here as well.
– user2719Apr 16 '13 at 16:14

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@StanRogers - thanks for the comment about rounding error. I hadn't thought about that as being a potentially significant factor. I've updated my answer to include that. How significant of an impact do you think it has? I always work in RAW so I don't have much direct experience dealing with rounding issues.
– AJ Henderson♦Apr 16 '13 at 16:49

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As Matt Grum pointed out in his answer, it really depends how complex the adjustments are. "Complex" can involve non-linear curves, dodging/burning with soft-edged brushes and the like, where each of the tools in an 8-bit space can handle its own side-effects, but then when you add the effects of one tool to the effects of another, it'll posterize badly on you. And you really don't need 16 bits to get around the problem; even 10 bits gives you four intermediate values in each colour at each pixel (which is why you'll never see the problems in the RAW space — my 2004 D70 is 12-bit).
– user2719Apr 17 '13 at 4:14